Top China Film Studio Plans Overseas Listing
来源: 横店集团传媒发展中心
作者: Doug Young
日期: 2005-06-15
The offering, most likely in Hong Kong or the United States, would involve Hengdian's filmed entertainment unit, said President Xu Yongan, who compares his company to names like Disney (DIS.N: Quote, Profile, Research) and General Electric's (GE.N: Quote, Profile, Research) Universal unit.
The Hengdian entertainment unit includes both movie and TV production and boasts a credit list that includes the Oscar-nominated film "Hero" by director Zhang Yimou. The listed vehicle would include movie and TV production facilities, as well as distribution operations and Hengdian-owned movie theaters.
Hengdian made 72 movies and TV series last year and expects that to jump to over 100 this year. It also operates electronics and pharmaceuticals divisions, but has seen the biggest growth recently in the filmed entertainment business founded in the mid-1990s, Xu said.
"We're thinking that this part of the company may go public," Xu told Reuters in an interview in Shanghai. "But I can't say if it will be by year-end." An overseas listing, a move that Beijing is encouraging many companies to make, would give Hengdian access to foreign capital and market discipline.
Earlier this year, a source familiar with the situation told Reuters that Hengdian was planning a Hong Kong IPO late this year worth up to $300 million.
Last year, the company formed a movie-making venture with Time Warner's (TWX.N: Quote, Profile, Research) Warner Bros. unit, an industry first after Beijing relaxed rules governing such ventures.
It is also negotiating a $15 million post-production joint venture with Hong Kong's Mandarin Entertainment (Holdings) Ltd. (0009.HK: Quote, Profile, Research) , Xu said.
GROWTH SPURT Hengdian's entertainment division, which aspires to be the "Hollywood of the East," generated a relatively modest 300 million yuan ($36 million) in revenue last year, far less than the 8.2 billion yuan for its electronics business and 5.5 billion yuan for its pharmaceuticals.
But Xu said the entertainment unit was growing much faster than the other two more mature areas. "The film portion is a very important investment for us. I estimate that this year that portion will grow 30-40 percent. That shouldn't be a problem." Xu said the Warner Bros. joint venture, with about $8 million in registered capital, was expected to start shooting its first film this summer and could make 2-3 movies this year with budgets in the $1.5 million to $2 million range. The venture has an eventual target of making about 10 movies a year, he added.
Many foreign media companies have looked to China, with its 1.3 billion potential moviegoers, as the world's next major movie market. But strong restrictions on distribution and the import of foreign films, along with a lack of high-quality theaters, has kept the industry from developing faster.
Rampant piracy, which often sees new movies coming out on pirated DVDs just days after a theatrical release, has also put off moviemakers seeking to build their presence in the market.
Warner's venture with Hengdian would allow it to get around the import restrictions, but it would still face other issues.
China has also been reluctant to allow foreign participation in its media industries, in a nation where movies, books and newspapers were traditionally viewed more as propaganda tools than as entertainment.
The country has only recently opened the publishing and filming industries to certain types of joint ventures.
It has also allowed limited overseas listings for some domestic media, with Beijing Media Corp. Ltd. (1000.HK: Quote, Profile, Research) , publisher of the popular Beijing Youth Daily, raising $116 million in an IPO last year for its advertising and sales units.
Xu said that Chinese media companies still face tough scrutiny when listing overseas due to traditional concerns. "The movie business is sensitive, but not as sensitive as the newspaper business," he said.